June 22nd, 2023 | 07:00 CEST
A lot of movement can be expected here: Covestro, Globex Mining, and Nikola - The focus is on 100% returns!
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Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
Covestro - Takeover bid worth 15% in one day
The market value of Covestro increased by just over EUR 1 billion the day before yesterday. The oil group Abu Dhabi National Oil Company (ADNOC) seems to have its sights set on the plastics group. If one is to believe informed circles, there have already been initial talks with Covestro representatives in Leverkusen. The possible takeover price is reportedly around EUR 50 to 55, about 30% above the average price of the last 3 months. With around 193 million bearer shares, this price would result in a market valuation of almost EUR 10 billion. It is difficult to imagine that the shareholder community would approve of this offer, especially considering the stock reached EUR 63 in 2021.
Bidder ADNOC produces almost all the oil for OPEC member in the United Arab Emirates. The group recently announced plans to invest EUR 150 billion to expand its natural gas, chemicals and green energy activities worldwide. Last year, ADNOC already bought shares in Austria's OMV AG worth around EUR 3.9 billion.
Covestro belongs to the group of technical specialty chemicals companies. Fundamentally, the leading producer of high-tech polymer materials as well as coatings and binders is trading at a 2025 P/E estimate of 11 and a price/sales valuation of a low 0.6 after an expected earnings slump in 2023. Analysts applauded the rumours and raised their estimates. Goldman Sachs rates the stock a "buy" and expects a target price of EUR 64 in 12 months. Conversely, the consensus target price on the Refinitiv Eikon platform still stands at EUR 46.10. The difference to the takeover price is still more than 10%, so the chances of price gains are not bad.
Globex Mining - Broadly diversified and affordable
The Greentech wave and the related fuss about strategic metals is playing into the hands of Canadian resource company Globex Mining (GMX). CEO Jack Stoch has been running the well-diversified explorer for over 30 years. The Company is a potential supplier of valuable metals in the energy renewal process. The current portfolio comprises over 200 properties, which are optioned to partner companies as exploration properties. This places the exploration risk outside of Globex. If a resource is discovered, the optionor receives permanent royalties from the start of production or can be bought out via a larger one-off payment. The holding company's properties, therefore, yield regular portfolio returns, steadily and reliably increasing shareholder income.
In early June, Globex reported on its latest deal with Burin Gold Corporation. This is for the acquisition of a 100% interest in the Dalhousie project, which consists of 31 claims and is located 53 km east of Matagami on Lac au Goéland in Québec. The property comprises an ortho-magmatic nickel-copper-cobalt deposit located within the mafic-ultramafic package of the Bell River Complex. Existing historical drilling until the late 1980s focused on poorly delineated geophysical anomalies, although mineralisation was successfully encountered. Historic chip channel samples assayed up to 3.79% Cu, 0.90% Ni and 0.28% Co.
Field work will commence this summer. Under the terms of the agreement, Burin will pay CAD 1.5 million upfront and issue 4 million shares which will be transferred to Globex. Exploration work of CAD 5 million is to be carried out over a 4-year period. Globex will receive 3% royalties on top after the potential sale in 2026. The good news sent GMX shares up from CAD 0.72 to CAD 0.81. With a market cap of CAD 44 million, Globex Mining is still undervalued.
Nikola - Like a phoenix from the ashes
The scandal-ridden company Nikola was in the news a lot, especially in 2022, when founder Trevor Milton was convicted of securities fraud. Even today, he owns 50 million Nikola shares and is always conspicuous for negative comments on social media. At the launch of its hydrogen-powered trucks, Nikola faced accusations that a promotional video showed false facts. The stock subsequently fell like a stone by 98% from a former USD 75 to below USD 1.50. However, a denotation from the Nasdaq was successfully prevented in 2023.
Now, with a market value of USD 820 million, the Company is making headlines again, as the first H2-powered truck is scheduled to be delivered in the autumn. Nikola recently reiterated that its third-quarter launch of the Tre FCEV Class 8 fuel cell electric truck remains on schedule. The Company says it has 178 orders from 14 different end customers. To get a grip on costs, Nikola is laying off 270 employees, 150 of them in Europe. It is hoped that this will result in annual savings of USD 50 million.
The Nikola share price seems to have turned around at the beginning of June. It gained 100% in 10 trading days and was quoted at USD 1.48 yesterday. On the Refinitiv Eikon platform, there are at least 9 analysts with an opinion on Nikola, which are cautiously between Neutral and Buy. The weighted average of the price expectations is calculated at USD 3.14, which is still a good 100% premium to the current price. Highly speculative and also quite volatile!
Since the big turnaround in interest rates, stock markets have become particularly vulnerable. Bad news leads to sharp individual markdowns in equities. Nevertheless, interesting opportunities are always lurking in the artificial intelligence and Greentech sectors. The long-neglected commodities market should also soon regain traction.
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